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LEE COUNTY — Lee County received a $102,362 check late last year from Office Depot, county officials said Friday.
The check brings the total amount of money received from Office Depot in relation to contract discrepancies cited by the county to $198,919.47, or roughly 10 percent of the $1.9 million the county paid the company while using its national piggybacking contract, Lee County Clerk of Court’s Internal Audit Director Chuck Short said.
On Dec. 21, 2009, the county’s Office Depot sales representative “came in by herself, presented it to Janet and said ‘Here,’” Short said of the check, referencing Lee County Purchasing Director Janet Sheehan.
Office Depot refunds issued to date:
Lee County government $160,467
City of Cape Coral $51,603
Edison State College $24,234
Sarasota County School District $41,124
Charlotte County government $75,146
City of Naples $12,042
Lee County School District $297,063
City of Pembroke Pines $22,000
“No explanation. No nothing,” said Short, a 50-year-veteran auditor. “They just say ‘pricing rebate.’ For what, we don’t know — for maintaining good customer relations.”
Office Depot issued a statement Friday saying the payment was not an “additional refund,” but was issued for the full expense incurred to the county under a second pricing plan county officials don’t believe was authorized, a pricing plan Short had already audited once and received a $58,105 credit for.
There has been much discussion about the two pricing plans on the contract, which 10,000 government and nonprofit customers spend $600 million a year on.
Office Depot says whether the second option was more expensive depended on the customer’s choice of products and overall expenses, and that it was not sold as a cost savings.
Fort Myers resident and former 12-year Office Depot senior account manager David Sherwin said he was told to sell the option “under the guise of a cost-savings” to the county and other agencies. Sherwin launched a campaign to notify agencies of the second-option issues and other allegations of overcharging on the contract after being fired for workplace misconduct.
Sherwin estimates 3,000 customers could be eligible for a total of more than $30 million in refunds for the pricing switch alone, only one of his many allegations.
Office Depot denies Sherwin’s allegations and calls them “outrageous.” The company points out Sherwin is being paid by Office Depot competitors to continue his campaign. Sherwin has no job. Further, in his position with the company, Sherwin would have been asking the agencies to switch to the second option, the reason he says he is disgruntled.
That being said, multiple public officials, including Lee County Superintendent James Browder, have said the company could not provide any document showing the switch to the pricing plan was authorized. Last month, the Lee County School District signed away any recourse to seek additional overcharges after accepting a refund of $297,063, or only about 5 percent of its $6 million in expenses on the same contract.
Sherwin, who is rarely calm, was pacing his apartment Friday after hearing of the company’s recent payment to the county. He said the school district should get the same deal as the county: An additional $300,000.
“Office Depot can use whatever semantics they want, but there’s only one word for it,” Sherwin said. “Office Depot screwed the Lee County School District over, and they knew they were doing it when they did it.”
Browder could not be reached late Friday on the issue.
Sheehan made statements contradicting what Short said. She said she called and met with Office Depot officials to discuss time periods Short’s original audit did not cover, for which the check was issued. She said the county was not asked to sign away any future recourse with the contract.
“Now, do you think I would sign anything out,” Sheehan asked. “No way.”
DAVID SHERWIN/OFFICE DEPOT
The Daily News documents government inquiries into Office Depot's government contract practices as we become aware of them or when they conclude. Many of these inquiries were full-blown investigative audits, while others consisted of government officials calling Office Depot and asking for a refund. For a full listing of all the inquiries, including descriptions of their findings and related documents, click here.
- Number of concluded inquiries: 25
- Number of concluded state-level inquiries: Seven, including two conducted in North Carolina and Florida, and one each in Georgia, Nebraska, California and Missouri.
- Number of second pricing option refunds issued: Nine, not including any refunds issued due to statewide settlements in Missouri or Florida or refunds not disclosed by the government agencies receiving them
- Total amount of second pricing option refunds or credits: $683,679, not including those issued from the $320,000 and $4.5 million accounts set up by the Missouri and Florida attorneys general, respectively
- Total amount of all refunds, credits or other settlement costs: $11,409,295, including the second pricing option refunds, settlements with the states Georgia, California, Florida and Missouri, and a refund paid to the City of Berekely, Calif.
- View the complete list of all concluded investigations, including their findings and related documents here.
When documentation verifying David Sherwin's claims of certain ongoing investigations can be found, they will be added to the list. Currently, Sherwin said the state of Washington's Office of Special Investigations and the Dallas County, Texas fraud auditor are also examining Office Depot's government contracts.
- February 2009: Office Depot releases in its annual report that three federal agencies, the Departments of Defense and Education and the General Services Administration, are working with the Department of Justice in investigating the company’s government contract pricing practices. Sherwin refused comment on the investigation. (Read filing, page 16)
- April 2009: Office Depot releases in its quarterly report that it is also being investigated by the Texas Attorney General's Office in relation to pricing practices, primarily with government customers. (Read filing, page 21)
- April 2009: Detroit Public Schools Inspector General John E. Bell says in the Detroit News that he is looking into the district's purchases through Office Depot's national piggybacking contract with Los Angeles County.
- July 2009: Office Depot announces in its quarterly report that it is also being investigated by the Colorado, California, and Ohio Attorneys General in relation to pricing practices, primarily with government customers. (Read filing, page 30)
- November 2009: Collier County School District Superintendent Dennis Thompson orders a review of allegations the district has been overcharged by Office Depot. The district purchases through the company's national piggybacking contract with Los Angeles County. (Read story)
THE DOCUMENT TRAIL
- Background on David Sherwin: Discharge paper from the Air Force, certificates detailing training received while an inspector general with the Florida Department of Health and Human Services, an article detailing the biggest case Sherwin handled while with HRS, and Sherwin's arrest reports. (Read documents)
- Documents provided by David Sherwin: Beginning with a June 2006 performance review in which Sherwin said he is encouraged to sell L.A. County option two pricing to increase IMU (profit), continuing with a series of e-mails leading up to the one which Sherwin said got him fired (contains explicit language), a cease and desist letter Sherwin said he received from Office Depot (which he ignored), and ending with the minutes of a meeting between L.A. County and Office Depot officials, in which issues with the contract are discussed. Office Depot officials have not confirmed the authenticity of the documents. (Read documents)
- L.A. County Master Agreement 42595: A copy of the original agreement shared by about 10,000 government agencies. (Read contract)
- Second pricing option: A list of the largest agencies using the second pricing option sent to Los Angeles County in October 2008.(Read documents)
- The new pricing option: In February 2009, Office Depot announced it will be doing away with the L.A. County agreement’s two pricing plans, and transition all customers to a new, simpler pricing plan on March 30, 2009. In a release, the company says the new plan will offer "enhanced transparency and accountability." (Read release)
- David Sherwin's communication with state and federal agencies: Beginning with his communication with the offices of the Florida Attorney General and Inspector General, continuing with an e-mail from the Securities and Exchange Commission, and concluding with letters from the states of Pennsylvania, Texas and Alabama. (Read documents)